If you own a business that was created in a state other than Rhode Island, you will need to qualify or register that business in Rhode Island if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Rhode Island) limited liability company (LLC) to do business in Rhode Island.
For Rhode Island purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Rhode Island. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Arizona is a foreign LLC in Colorado.
According to Rhode Island’s LLC Act, you are required to register your foreign company with the state of Rhode Island if you are “transacting business” in Rhode Island. What does this mean? Well, like most states, Rhode Island’s LLC Act does not specifically define the phrase “transacting business” in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, Rhode Island’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
The LLC Act also indicates that this list is not exclusive; other activities also may be exempt. For the full, legal description of each of the listed items, check Section 7-16-54 of the Rhode Island General Laws. If your LLC’s only activity in Rhode Island is one or more of the listed items, you should not need to register with the state.
To register your business in Rhode Island, you must file an Application for Registration with the Rhode Island Secretary of State (SOS). You can download a copy of the application form from the SOS website.
To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for a Rhode Island application for registration, you need to provide:
If your LLC will provide certain types of professional services you may need to provide additional documents. Check the application instructions for details. The filing fee is $150.
If your LLC transacts business in Rhode Island without authority, it cannot bring a lawsuit in any of the state’s courts. However, not being registered does not invalidate your LLC’s contracts or prevent it from defending a lawsuit in Rhode Island. Also, a member of the LLC is not liable for the LLC’s debts and obligations solely because the company transacted business in Rhode Island without authority.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Rhode Island are similar. You will, however, have to use a different Application for Registration(Form 450). See the Rhode Island Secretary of State website for forms, information, and filing instructions for registering a foreign corporation in Rhode Island.